MONEY»
PEs wait in vain for reform as parties bicker
KATHMANDU, AUG 24 -
The government’s plan to reform public enterprises (PEs) has been put on the back burner due to delays in forming a new government and releasing a complete budget. Reform proposals for a number of PEs that had been submitted to the privatisation committee of the Ministry of Finance are gathering dust.
Nothing has been done about the proposals related to divesting the government’s stake in five PEs including Agricultural Development Bank Limited (ADBL), Nepal Bank Limited, Nepal Telecom (NT), four rural development banks and the Nepal Stock Exchange (NEPSE).
Likewise, no headway has been made with regard to settling the issue of salary in two PEs. Following the resignation of Prime Minister Madhav Kumar Nepal, the Privatisation Committee has not met for the last two months.
“The members of the committee have suggested to us not to hold a meeting during this time of political uncertainty,” said Tanka Mani Sharma, joint secretary at the Finance Ministry who is in charge of overseeing the PEs.
The Privatisation Committee, headed by Finance Minister Surendra Pandey, also includes representation of the main opposition party, the chief of the economic committee of parliament and others.
A meeting of the committee took place for the first time in three years on May 14. A second meeting was held on May 21 which formed a sub-committee under the coordination of UCPN (Maoist) lawmaker Hari Roka to seek strategic partners for some PEs. The other members of the sub-committee are the governor of Nepal Rastra Bank, a member of the National Planning Commission and the revenue secretary.
The sub-committee has been assigned to study the proposals submitted to the privatisation committee first and make its recommendations after necessary research and assessment. Roka, however, said that the sub-committee could not work until a new government was formed because it might have different views regarding PEs.
One of the proposals sent to the privatisation committee is related to capital restructuring of the ADBL. The government wants to transfer its majority share holding in the ADBL to the private sector. As part of this plan, the ADBL has made an initial public offering worth Rs. 960 million thereby reducing the government’s share to around 51 percent. The government wants to decrease its share further to 21 percent.
The government’s political decision is essential to get the assistance promised by the Asian Development Bank (ADB) for the ADBL’s rural financial sector programme, said Sharma. “The delay in forming a new government is preventing the signing of an aid deal with the ADB,” added Sharma. The ADB had also provided grants to the ADBL to install a core banking system that enables it to provide any bank branch service.
The political stalemate has also put in limbo the government’s plan to sell its shares in Nepal Telecom to the private sector. “The government has offloaded onto the public around 8 percent of its stake, but it wants to bring down its share to around 25-30 percent,” said Sharma. The NT management has also been insisting on bringing in a strategic partner amid growing competition from private telecom service providers.
Another proposal submitted to the committee has to do with divesting the government’s shares in four rural development banks —Purbanchal Grameen Bikas Bank, Paschimanchal Grameen Bikas Bank, Madhyapaschimanchal Grameen Bikas Bank and Sudur Paschimanchal Grameen Bikas Bank —in which it has a 8-16 percent stake. The government’s shares in Madhyamanchal Grameen Bikas Bank have already been sold.
The proposal to go for an initial public offering (IPO) of Nepal Bank Limited has also stalled. The government has a 40 percent stake in the bank which has a paid-up capital of Rs. 380 million. Nepal Bank still has a negative capital structure, and the government wants to inject additional capital by making an IPO. Whether other shareholders would want to make further investments in a bank having rebellious trade unions remains a question.
The privatisation committee is also mulling whether Nepal Orind Magnesite and Nepal Metal Company should be closed down or brought back into operation. The two factories have not been functioning properly for the last three decades, and their 83 employees have not been paid for the last one year.
The government also wants to offload its shares in NEPSE in which it has a 58.66 percent stake. Nepal Rastra Bank owns 34 percent of the shares, and its board has decided to get rid of them this fiscal year.
Posted on: 2010-08-25 08:23
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